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Ethical Financial Advisors Can Help Clients Avoid or Spot Fraud, Says the North American Securities Administrators Association (NASAA)

Some estimates suggest American seniors lose nearly $40 billion a year due to elder financial fraud

According to a 2015 report from the retirement planning site True Link, American senior citizens lose an estimated $35.6 billion each year from investment scams and other fraudulent financial schemes. Despite the role that shady financial advisors play in many cases of elder fraud, ethical advisors may be the people best equipped to determine when financial fraud has been perpetrated on one of their elderly clients by another individual.

The idea that brokers can act as a shield against elder fraud isn’t just an fuzzy concept: according the North American Securities Administrators Association (NASAA), brokers and financial advisors report more than 2,300 cases of elder fraud each year. Considering the fact that many elderly individuals may not possess a high degree of financial literacy (in addition to issues with cognitive decline, such as dementia-related confusion or memory loss) brokers and advisors are in a perfect position to identify financial inconsistencies in accounts, such as large, unexpected withdrawals or a series of small, suspicious ones.

How some firms are helping prevent elder investment fraud

While brokerage firms have a long way to go when it comes to policing their industry, many firms have made steps in the right direction. According to the NASSA study, 95% of brokerage and advisory firms do provide their employees some kind of training regarding elder fraud, and 90% have a team or a specific process for dealing with senior issues. However, there’s still a lot of work to do – as only one-third of the firms surveyed had a truly comprehensive approach to elder fraud, including policies such as providing family contact forms for senior clients. A majority (54%) of the firms also lacked a specific policy defining senior customers.

How elderly investors and their family members can spur brokers to identify the warning signs of fraud

If you believe that you or an elderly family member is at risk for financial fraud, it’s important to have a productive conversation with your financial advisors about the issue, especially after a recent change to a new advisor, or upon consideration of a new one. You should ask questions that include:

What are the firm’s general policies on elder fraud prevention?If and how they collect contact information of family members or guardians to report suspected elder fraud

  • If and how they collect contact information of family members or guardians to report suspected elder fraud
  • If and how they collect contact information of family members or guardians to report suspected elder fraudHow and to whom do they report suspected elder investment fraud?
  • How and to whom do they report suspected elder investment fraud?
  • How do they deal with brokers or advisors in their own organization who are suspected of fraud?
  • How do they deal with potential cases of intra-family elder fraud (a family member is suspected of perpetrating an investment fraud on an elderly individual)?

Much of a broker’s ability to prevent elder fraud simply relies on being vigilant and aware of each of their elderly client’s accounts. For example, if a broker sees a large order for a type of investment they know is unsuitable for their senior client’s investment goals, they could put a hold on the order until meeting with the client. This meeting affords the opportunity to ensure that the client is aware of the transaction, that he or she is of sound mind, and that he or she understands how the investment works (and what kinds of risks and returns they can realistically expect).

Always make sure to thoroughly vet brokers or advisors to protect yourself and your family from fraud

If you or an elderly family member is concerned about becoming a victim of elder fraud, it’s important to make sure that the broker or advisor himself isn’t posing a risk – and that’s why it’s essential to research them first.

While a Google search is a good place to start while researching a broker or financial advisor, you’ll also want to check out their professional records, including their BrokerCheck Report. This helpful service provided by the Financial Industry Regulatory Authority (FINRA) reveals a broker’s work and education history and any disputes filed against them by customers alleging unethical activity, as well as the outcomes of those disputes.

If a broker has complaints levied against them, it’s a good idea to stay clear. With so many credible professionals out there, there’s no reason to invest (or have an elderly family member invest) with one with a less than stellar reputation. And if you think that you or an elderly family member has already become a victim of investment fraud or other activity that violates securities industry regulations, contact an experienced attorney immediately.

The attorneys at Silver Law Group are leaders in the field of securities arbitration and elder financial fraud. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means that we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.

Be on the Lookout: 3 Common Signs of an Investment Scam

Awareness will help you avoid becoming a victim of elder financial fraud

Investment fraud is something that can affect anyone, but elderly people seem to be targeted the most. According to one study, 1 in 5 people in the U.S. over the age of 65 have been the victim of a financial scam. Various studies have found that due to elder financial abuse, seniors lose billions every year.

So, how can you protect yourself and your loved ones from fraud? Vigilance is the key. Here are three common signs of investment scams to be aware of:

Unsolicited offers

If you haven’t inquired about an investment opportunity and you find one in your mailbox or in an email, or receive a phone call, be cautious. These days, scammers have gotten more sophisticated – so even if you do some digging and discover what appears to be a legitimate company, it may not be. If there is any doubt, you can check out the Scam Meter created by the Financial Industry Regulatory Authority (FINRA). You should also be wary of advertisements for seminars or other events that offer things like free lunches, as these are frequently accompanied by aggressive sales pitches.

“Act now!”

A good sign of a bad deal is when someone is insisting that you absolutely can’t wait to make an investment. They’ll tell you how great the opportunity is and you’ll be missing out if you don’t act quickly, or claim the cost to get in will dramatically increase. What they’re often really trying to do is get your money before you can do any research or get additional information. Remember that most valid investments can wait, and a reputable broker or financial professional won’t try to push you into anything. To check credentials and work history of a broker or a firm, you can make use of FINRA’s BrokerCheck service.

Unrealistic guarantees

There are no guarantees with investing; any legitimate investment carries some degree of risk. When something seems too good to be true – like an investment touted as low risk, high reward – it probably is. If you’ve been presented with an opportunity that offers a high guaranteed rate of return, be sure to look at the fine print that mentions the risks and any fees you’ll be on the hook for.

It is almost inevitable that at some point in your life, you will encounter an investment scam. As long as you stay alert to the warning signs and do your due diligence, you can keep your money safe from unethical brokers or financial advisors. But if you have already been the victim of elder financial fraud, there are things you can do to potentially get your money back. Your first step should be to talk to an elder fraud attorney at the Silver Law Group. Through securities arbitration, we may be able to help you recover lost funds. And because we work on contingency, you won’t owe us anything unless we’re successful.

To get the process started, fill out our online contact form.

New FINRA Guidelines Aim to Protect Seniors from Elder Financial Fraud

Learn about the safeguards that can help older investors

The Financial Industry Regulatory Authority (FINRA) is a nonprofit organization overseen by the government and tasked by the securities industry to protect investors through the creation and enforcement of rules and regulations. Periodically, FINRA makes adjustments and revisions to its guidelines, and the agency recently added measures to safeguard elderly investors.

In its 17-13 regulatory notice, FINRA spells out its new principal consideration, one of which is intended to protect vulnerable customers. Focusing on the undue influence a broker could have over a customer, the regulation “reaffirms that financial exploitation of senior and other vulnerable customers should result in strong sanctions.”

In addition, FINRA has created more new rules to stop the exploitation of seniors. Starting in February of 2018, firms will have to make an effort to get the name and information of a trusted contact person associated with the customer’s account. And if it is believed that financial exploitation of an elderly customer has occurred, firms will also be allowed to put a temporary hold on a disbursement of funds. This will give firms the time to investigate the situation and get in touch with the customer, trusted contact, and – if necessary – law enforcement.

“These rules will provide firms with tools to respond more quickly and effectively to protect seniors from financial exploitation,” said Robert W. Cook, FINRA President and CEO. “This project included input and support from both investor groups and industry representatives and it demonstrates a shared commitment to an important, common goal – protecting senior investors.”

Although there have been some positive signs recently when it comes to elder financial fraud, including increased awareness of the issue, it continues to be an epidemic around the country. In fact, part of why FINRA is making new rules has to do with the number of calls their helpline has gotten. Created in April of 2015, this helpline has received almost 9,000 calls. On a positive note, in just two years, FINRA has been able to recover more than $4.3 million for seniors who were victims of elder investment fraud.

If you suspect that you or a loved one has been the victim of fraud, you too may be eligible to get money back. To find out, contact the Silver Law Group for a free consultation from an experienced securities arbitration attorney.

You can send us a message through our online contact form and we will be in touch shortly.

SEC Takes Action to Reduce Instances of Senior Fraud

New rules are intended to assist financial institutions in reducing the amount of investment fraud targeting seniors and other vulnerable investors.

Senior investment fraud. Elder fraud. Elder financial abuse. Scamming older investors. No matter what it is termed, this unfortunate activity takes place at a far greater rate – with far greater losses – than necessary. In fact, a 2011 MetLife study found that the losses of elder financial abuse victims are at least $2.9 billion annually.

Why is elder financial fraud so prevalent?

It’s simple: the elderly are easier targets. As the population ages, more individuals experience a decline in mental capacity, although sometimes it is difficult to detect. Many are hesitant to even report being taken advantage of out of embarrassment for being duped, fear of losing their freedom to make their own decisions, or worse, fear of implicating someone close to them for taking advantage of their financial situation.

What is the SEC doing to curb senior investment fraud?

Since financial advisors and brokers are on the front lines when it comes to monitoring elder finances and detecting elder financial abuse, the SEC acted in February 2017 to help financial institutions identify when an elderly or vulnerable client may be at risk. The SEC now requires that brokerage firms make reasonable effort to identify a “trusted contact person” on an elderly or vulnerable investor’s account. This named trusted contact (typically a friend or family member) can then be contacted by the broker if there is any suspicious activity on the client’s account, or to confirm the client’s health status or mental capacity.

While clients are allowed to refuse to provide a trusted contact person, and firms are not required to update all of their elderly or vulnerable client files unless a significant change is submitted on the account, the information does allow brokers to intervene if they suspect fraud or if the client’s decision making seems impaired.

If the financial institution suspects fraudulent activity on a “specified adult” account, the SEC action also grants the institution the right to temporarily freeze disbursements from the account. Specified adults are considered those at greater risk for fraud, including people over 65 or any adults vulnerable due to mental impairment.

When a hold is placed on the account, the broker then can notify all parties in the transaction to ensure the legitimacy of the disbursement. If fraudulent activity is taking place, legal action can be taken. If there is no action taken, the hold will be lifted automatically in 15 days.

What else can elder investors do to protect themselves?

The self-regulatory agency for the brokerage industry, the Financial Industry Regulatory Agency (FINRA) helps senior investors protect themselves by providing a toll-free Securities Helpline for Seniors. This helpline provides older investors with information on their investments and brokerage accounts, including assistance reading statements and understanding transactions. The helpline number is 844-574-3577.

In addition to the helpline, FINRA also provides information regarding brokers and advisors through BrokerCheck.FINRA.org. Information provided through BrokerCheck includes broker and advisor compliance records and any disciplinary actions; it is a valuable source of information if you are considering engaging a new financial broker or advisor, or checking up on a current one.

The Silver Law Group’s attorneys are frequent lecturers at retirement communities, town meetings, pension groups, and other settings, and we discuss with those audiences proactive measures to avoid being victims of investment fraud. We would be happy to speak to your group, free of charge, about what the members of the group can do to protect themselves from investment fraud. We never charge for a consultation and are happy to talk privately with someone about his or her personal situation. Contact us today for more information.

How to Spot Elder Financial Fraud (and How Ethical Financial Advisors Should Act to Stop It)

Advisors and other trusted professionals have an ethical duty to stop senior financial fraud

Elder financial fraud is an increasingly serious issue in the U.S. As more Americans become seniors – at the rate of about 10,000 a day – new victims across the country are feeling the consequences. This means that whether you’re a financial advisor, accountant, or lawyer with elderly clients, or you simply have older friends or family members, it’s essential to understand the warning signs of senior financial fraud. By doing so, you may be able to help protect the seniors you care about from serious monetary losses as well as the associated emotional damage when someone becomes a victim.

FINRA has made several recent changes in order to help advisors combat senior fraud

Experts believe that financial advisors may be “in the best position to identify suspicious activity, even before family and friends,” and the Financial Industry Regulatory Authority (FINRA) has new policies that have taken this concept into account. In particular, financial and investment firms must now make a “reasonable effort” to identify a trusted contact person or next-of-kin when opening a customer’s account.

This allows a financial advisor to contact a family member in the case of suspicious account activity or suspected elder fraud. However, having a close family member as a contact person can sometimes be a double-edged sword; statistics show that most senior citizens are “abused by someone they know and trust,” so a financial advisor’s call could simply be “tipping off” the perpetrator of the crime.

AARP believes that financial advisors need more training to effectively fight elder fraud

Despite a variety of policy changes made by FINRA, most brokers and advisors simply don’t have the right training to effectively combat elder financial abuse – much of which involves understanding how to deal with clients who may have diminished capacity. According to the AARP Public Policy Institute, only 33% of financial advisors, and only 25% of compliance officers underwent required training on “issues related to diminished capacity.” Therefore, while recent policy changes may have positive effects, much more broker and financial advisor education will likely be needed in order to seriously combat elder financial fraud.

There are a few major signs that financial advisors (and other individuals) can watch for that may indicate fraud. These include:

Unexpected and/or repeated cash withdrawals or wire transfers could be a sign of elder fraud

Whether you’re a financial advisor or simply a concerned friend or family member, if you see that a senior is making unexpected and/or repeated cash withdrawals or wire transfers from savings or investment accounts, it could be cause for alarm. For example, if a financial advisor sees that a senior client has been making these withdrawals from a retirement account or trust (especially an account intended for emergency funds or one intended for their children or spouse’s inheritance), they should check with their client for further clarification. Friends and family members, in comparison, may be more likely to pick up on irregularities involving checking or savings accounts, and also should immediately ask seniors about any strange or unexpected patterns they see.

New friends, associates, or relatives appearing with a senior (or seemingly making financial decisions for them) could be another sign of elder fraud

Unfortunately, it’s all too common for scammers to ‘befriend’ an older person, simply to find a way to steal their money. In other cases, a long-lost or estranged family member returns to ‘befriend’ their senior relative they haven’t spoken to in years – also with the intent of stealing or defrauding them of funds.

In yet other situations (often when a senior is suffering from dementia or Alzheimer’s), a stranger may pretend to be a long-lost relative such as a cousin, nephew, or even a child in order to gain the trust of an elderly victim. Advisors should watch closely for suspicious behaviors, such as a new relative or friend suddenly making calls dealing with the senior’s finances, or hearing another individual’s voice on the phone when speaking with an elderly client.

If a senior is uncharacteristically excited about a potential investment but won’t reveal details, it could be an indication of fraud

Many fraudsters will attempt to get seniors excited by telling them that they’ve won some kind of lottery, prize, or award. After getting the victim excited, they may attempt to sell them fraudulent real estate, fake insurance, or phony investments. Therefore, if advisors or others see that a senior is uncharacteristically excited about “winning” or “getting” money or a prize, but can’t (or won’t) fully explain the situation, it could be a sign of fraud.

While unethical financial advisors contribute to senior fraud, ethical advisors may be able to prevent it

Financial advisors are put in a position of great power and responsibility, especially when they manage the financial portfolios of senior citizens. For unethical advisors, it’s all too easy to take advantage of many older customers, especially if the client doesn’t fully understand their financial situation and doesn’t have trusted friends or relatives they can turn to for help. At the same time, ethical financial advisors are in a unique position to help their clients prevent major financial losses by detecting fraud at its earliest stages. In addition, firms are responsible for supervising the activity of their brokers and financial advisors, and can be liable for any losses related to fraud.

If advisors are to fully embrace their roles as financial protectors of the elderly, they’ll need more education, smarter regulations, and better government policies to back them up. For now, however, ethical brokers and advisors can still use the tools and training they already have to make a positive impact on their clients’ financial futures – no matter what their age.

The attorneys at Silver Law Group are leaders in the field of securities arbitration. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.

Elder Financial and Investment Fraud Continues to Grow at an Alarming Rate

Research suggests nearly 40% of American seniors may experience financial abuse

Across the U.S., millions of seniors each year become the victims of fraudulent financial and investment scams. In fact, one recent survey reported that 37% of senior caregivers said their client had been a victim of financial fraud or abuse – and alarmingly, 40% of caregivers surveyed said that their client had been victimized more than once. The perpetrators, many of whom are family members, often take advantage of a senior’s reduced mental capacity in order to persuade or pressure them into making serious financial mistakes.

To fix this problem, a variety of organizations, including state governments and nonprofits like AARP, have started initiatives to expand education for seniors, improve awareness and reporting among financial and healthcare workers, and increase the severity of punishment for those found guilty of elder fraud.

Government, educational, and nonprofit organizations have been taking steps to combat senior fraud

Estimates suggest that U.S. seniors lose nearly $40 billion a year to financial fraud and abuse. And while many believe the problem has been getting worse, others think that important progress has been made, especially by nonprofit and governmental groups aiming to combat the problem. Part of that progress involves the success of both public and private programs that aim to help educate seniors about the risks of financial fraud and how to avoid becoming a victim. In many ways, preventative education is the most effective way to combat elder financial fraud. No matter how strict the laws are, if seniors aren’t educated, they’ll still be vulnerable to a variety of threats.

Senior fraud prevention and financial education programs vary greatly in size, type, and scope. Some programs simply involve online articles, videos, and other informative content, while others are decidedly more interactive. One program, created by a Los Angeles acting troupe, involves a traveling theatre show that ‘acts out’ common financial scams and financial abuse scenarios in order to help the audience understand the specific language and techniques that fraudulent individuals use to hoodwink their victims.

Attorneys say seniors should consult friends or family members before giving out information over the phone

Fortunately, it doesn’t take much for seniors to begin protecting themselves from financial fraud, and attorneys have a few tips:

  • Hold periodic financial meetings with multiple family members in order to sort through your personal finances, ask questions, and make sure any irregularities aren’t due to fraud or abuse.
  • Choose a “financial caregiver” – a close friend, relative, or professional who can devote time to helping sort through your personal finances (it should not be the same person as a regular caregiver). Make sure this person is responsible and has a good hold on their personal finances.
  • Background check and research workers before hiring them, especially home caregivers.
  • Research all brokers and financial advisors before hiring them (Use FINRA’s BrokerCheck and other, similar resources).
  • Before giving money or credit card, bank account, driver’s license, and social security numbers (or other personal info) out on the phone, contact a trusted friend or relative. Even if the person or organization you’re speaking with seems completely legitimate, they may not be.

Organizations find educating workers at every level of the financial industry is essential for reducing fraud

When it comes to combating senior fraud on the corporate level, the issue isn’t just the responsibility of high-level financial executives; it’s also essential that everyday workers in the financial industry understand the warning signs of senior financial fraud and abuse. For example, bank tellers, brokers, and call center operators can be trained to keep their eyes open for suspicious activity or irregular patterns. This could include evidence indicating a senior is being forced to make major financial decisions under duress. Alternatively, it could be another person calling on behalf of or simply attempting to impersonate a senior they are attempting to steal from.

In order to address senior financial abuse, significant worker training is needed. Some of this training comes from independent non-profit programs, such as AARP’s Bank Safe program, an online education program which can help train the staff at financial institutions to detect fraud as early as possible.

In addition to training, many organizations are now employing technology to detect financial irregularities that could indicate fraud or financial abuse, including software that alerts bankers when someone attempts to withdraw a large sum from an account at once. These kinds of programs can often delay suspicious transactions in order to give the bank time to verify the identity and true intent of the customer.

New state laws and regulations aim to decrease the prevalence of elder fraud

Despite these positive strides, many victims are finding that laws about senior financial abuse may not require financial institutions to make especially strong efforts to prevent fraud. But despite what some consider the lack of thorough, universal regulations regarding elder fraud, a variety of new laws are slowly changing things. In particular, many recent regulations are beginning to require that bankers, broker/dealers, investment advisors, and other financial professionals report signs or evidence of elder abuse to authorities.

According to the National Conference of State Legislatures, in 2015, “23 bills or resolutions were adopted or enacted” to help prevent elder financial fraud. Some of the laws work to increase punishments for those found guilty of fraud, while others increase mandatory training requirements for financial industry workers, such as brokers and financial advisors. Other rules tackle specific financial products, such as annuities (which are often aggressively marketed to seniors), by increasing minimum death benefits, and mandate that elder personal assistants and other home health care workers report suspected cases of elder financial abuse.

Efforts from a variety of organizations are working to contain the growing problem of elder financial abuse

With around 10,000 individuals turning 65 in America each day, elder financial fraud has the potential to become far worse than it already is. Lack of education and an increasing number of victims make it all too easy for both professional criminals and unethical professionals to take advantage of seniors, especially those suffering from dementia and other types of cognitive decline. However, if organizations like state governments, nonprofits, and for-profit firms continue working together, they just may be able to stem the tide of elder financial abuse. To do this, they’ll need to continue helping seniors by both educating them about personal financial safety and harshly punishing those who would victimize them for profit.

If you or a loved one has been the victim of elder financial fraud by an unethical broker or investment professional, contact the Silver Law Group. Our attorneys are leaders in the field of securities arbitration and we represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.

FINRA plays an important role in our financial system. Learn how.

Learn how the organization protects you as an investor

If you have been investing for a while or you follow news about the securities industry, you have probably heard about the Financial Industry Regulatory Authority, also known as FINRA. Though not a part of the government, FINRA is given authority by Congress to ensure the “broker-dealer industry operates fairly and honestly.” FINRA employs more than 3,500 people, but because it is a nonprofit, no taxpayer money is used to keep the organization running.

What does FINRA do?

FINRA plays an important role in our financial system. Its goal is to maintain high ethical standards in the securities industry, offer the best resources for regulation, and enhance both safeguards for investors and the overall integrity of the market. They do this by:

Enforcing their rules

Every broker and brokerage firm in the U.S. is obligated to adhere to the rules set by FINRA, and the agency routinely examines them to determine if they are in compliance. FINRA also makes sure that all brokers are licensed and registered and that they pass their qualification exams and meet continuing education requirements. In addition, broker advertisements, websites, and other communications are looked at to see if the information is presented fairly and is not misleading.

Disciplining brokers and firms that break the rules

If FINRA discovers that a broker has violated their rules, they can face severe sanctions, which could include a fine, suspension, or even a permanent bar from the industry. Last year, the organization brought over 1,400 disciplinary actions against brokers and firms, with fines totaling $176.3 million. Affected investors received almost $28 million in restitution.

Searching for wrongdoing

Using technology and different data collecting techniques, FINRA can detect potential unlawful activity across markets. On an average day, 37 billion transactions are processed by FINRA. The agency also works with the SEC and other government bureaus in order to stop possible fraud.

Educating investors

FINRA offers an assortment of tools and resources to investors so they can make smart decisions with their money. These include:

  • BrokerCheck, a resource that has information about the professional background and history of both brokers and firms
  • Market Data Center, where investors can learn about financial instruments, such as data on bond market activity from the Trade Reporting and Compliance Engine
  • Risk Meter a tool that allows investors to see if they could be vulnerable to investment fraud
  • Scam Meter, which – by answering four questions – can help investors determine if an investment opportunity is too good to be true

Resolving problems

If an issue arises between a broker and an investor, FINRA uses a dispute resolution forum designed to solve problems. The largest of its kind in the U.S., this forum handles almost all of the securities-related arbitrations in all 50 states, along with Puerto Rico and London.

While FINRA is an important safeguard for investors, it isn’t foolproof; unscrupulous brokers and firms are always trying to figure out how to skirt their rules in order to profit. If you believe that you were the victim of fraud or another action that resulted in the loss of money, FINRA securities arbitration could help you get it back, but it is important to talk with an arbitration attorney as soon as possible.

The Silver Law Group has been working to get lost funds back to investors for years, and we’ve helped recover millions of dollars. To learn what we may be able to do for you and to get a free consultation, give us a call at 800-975-4345 or just fill out our online contact form. The Silver Law Group is a contingency-based firm, which means if you don’t get money back, you will not owe us anything.

The SEC Guide to Protecting Seniors Against Investment Fraud

The SEC guide offers a variety of suggestions to help senior citizens protect their assets from fraud

An estimated 7.3 million American seniors have been victimized by financial or investment fraud, and most experts believe that elder financial fraud is becoming more of an issue as the population ages. Each year, the SEC shuts down and investigates millions of dollars’ worth of investment scams aimed at seniors and other vulnerable groups. That means it’s never been more important to understand the signs of financial abuse, and a new guide published by the SEC’s Office of Investor Education and Advocacy helps seniors do just that. In a nutshell, here’s what it says:

Asking smart questions is key to keeping your portfolio safe

Unethical brokers and other individuals promoting fraudulent investments prey on the ignorance of potential investors, so ask questions and find the answers. Imagine you were a journalist assigned to write an investment review; after thorough research, would you recommend the investment to your readers?

When looking up an investment, it’s advisable to gather information on multiple subjects, including the company’s history, the career and regulatory histories of company executives (and the person selling you the investment), and the potential risks that the investment might carry for investors. To do this, you may want to use the SEC’s EDGAR database, a service that allows investors to examine the financial statements of many companies. To check on the broker trying to sell you an investment, you can easily use FINRA’s BrokerCheck reports to read up on their regulatory history, as well as any complaints that have been filed against them.

It’s important to make sure you get your information from verified sources, such as the sites mentioned above, or trustworthy publications (i.e. those that do not have a financial incentive to recommend certain investments). Beware of information on private company websites, chat rooms, message boards, and other unverified sources. While some of these sources may be able to warn investors about potential scams, much of the data on the internet is wildly inaccurate.

Don’t rush into a large investment without research and thorough consideration

One of the most common hallmarks of financial fraudsters is an attempt to rush buyers into making an investment without taking the time to consider the potential risks. Scammers will often employ some supposed external financial constraint, sometimes claiming that the price will double, or the investment won’t be available if the buyer waits more than a day or two. In these and other cases, investment sales people often take advantage of the fears of retirees, so it’s essential to stay calm and not let a dramatic presentation convince you to make a rash decision.

Remember, investment salespeople can be extremely convincing, so don’t base any investment decisions on how someone sounds. Instead, do your best to take a rational look at the facts, consult research and experts, and make an informed, independent opinion about whether purchasing a specific investment is likely to help you get closer to your financial goals.

If a broker or company won’t allow you to cash out your investment, you could be a victim

Unless you have specifically agreed to purchase a type of illiquid investment, you should be able to sell your investment at any time. If a broker or advisor says they will not allow you to access your funds, demand access anyway; in many cases, by this stage, a broker will have already stolen some of the investor’s funds. Many scammers will attempt to convince investors to reinvest, or “roll-over” their principal and profits, but don’t be fooled by this common trick.

Be wary of investments promising high returns, and remember that nothing is guaranteed

All investments have risk; and in the vast majority of cases, potential risk and potential rewards go hand-in-hand. The riskier an investment is, the more likely it is to provide a higher return over time. There is no such thing as a 100% guaranteed investment, and investors should be wary of investments promising returns far greater than the market average. In general, this is about 10-11% for stocks and considerably less (closer to 4-5%) for most bonds. There are exceptions, of course, but most salespeople promising far above these amounts are being inaccurate at best, and in many cases, could be actively deceiving customers about the nature of their products.

Becoming aware of the most common types financial scams may help seniors avoid them

When it comes to fighting elder financial fraud, information is the best weapon. If seniors fully understood the investments unethical financial advisors try to sell them, they likely never would have purchased them in the first place.

Here are a few of the most common types of scams:

  • Ponzi and pyramid: these fraudulent investments schemes rely on a constant influx of cash from new investors in order to keep paying off the old ones. Of course, these schemes are unsustainable and usually end in disaster.
  • Oil and gas: many fraudulent investment salespeople hawk oil and gas investments as the next big thing; but in many cases, the investments they’re selling are fraught with risk. Always verify the exact nature of any commodities-based investment well before you consider buying it.
  • Promissory notes: are a form of debt to a company, like a bond, often with a fixed rate of return. While they exist, they are almost never sold directly to the public – so if someone is offering to sell them, it could be a scam.
  • Prime bank fraud: occurs when scammers convince investors that high-level bankers have special access to high-yield investment programs (HYIPs) and “prime bank” financial instruments – access to which the investor can also get, at a price. The problem: neither of these two instruments, nor the imaginary markets upon which they trade upon, really exist.
  • High return/risk free investments: if an investment salesperson offers investments like junk bonds, penny stocks, options, and futures, especially if they claim the investments are low-risk or risk-free, be wary. As mentioned before, no investment is without risk – and high-risk purchases like futures simply aren’t compatible with the investment goals and financial needs of most retirees. This unsuitability is a common issue with unethical financial advisors.
  • Internet fraud: can come in the form of emails, social media messages, or a sophisticated-looking website. Remember, with today’s tech, it takes only a few minutes to create a website, so don’t be fooled by outward appearances. Beware of any unsolicited emails or messages, especially those asking you to share personal financial information. Never give your personal info to an unverified source.

Investors with professional designations may or may not be more qualified to handle your investments

There are many investment professionals who have titles, professional certificates, or other designations that they may claim make them more qualified to recommend investments to seniors or to more effectively manage the portfolios of retirees. Unfortunately, there is no one universal professional body that grants these types of titles. That means that each of these certifications or designations needs to be researched independently to understand what they are and what they mean for you. It’s also important to understand that no particular senior investment certifications have ever been approved by FINRA or the SEC – so you should take every title, designation, or certification with a big grain of salt.

If you think you’ve been the victim of an unethical broker or financial advisor, contact the correct regulatory and government agencies, as well as an experienced securities attorney

No matter what happens, don’t be afraid to complain if you think you might have been the victim of investment fraud. The perpetrators of elder financial fraud rely on the fear and silence of individuals to get away with unethical or illegal behavior. The more quickly you file a complaint, the easier it is to research the claim and the better chance there is to recover lost funds. In addition to contacting the correct regulatory agency, investors should also contact an experienced securities arbitration and elder financial fraud lawyer.

The attorneys at Silver Law Group are leaders in the field of securities arbitration. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.

Good News About Elder Financial Fraud?

Yes and no. One survey states the proportion of elder financial fraud victims is down, but thieves are choosing more lucrative targets

According to estimates, billions of dollars are stolen from elderly people every year. Whether by financial professionals, caregivers, or even family members, financial elder fraud has been rampant in the U.S. for years.

“Older Americans make attractive targets for financial exploitation because many have accumulated some wealth in the form of retirement savings or home equity,” said Richard Cordray, direction of the Consumer Financial Protection Bureau (CFPB). “They can be isolated and lonely, and some may have impaired physical or mental capacity that makes them especially vulnerable.”

However, there does seem to be a little glimmer of hope. Recently, the nonprofit Investor Protection Trust (IPT) conducted a survey that revealed that rates of elder fraud may be dropping. Although 17 percent of Americans 65 and older admitted that they have been taken advantage of when it comes to their finances in 2016, that figure dropped slightly from a previous survey – it was 20 percent in 2010.

A slight drop in the survey, but bigger targets

One of the reasons why fewer older people may be victimized is because scammers are changing their approach, says Don Blandin, IPT President and CEO. Instead of going after several people for smaller scores, they’re now focusing on more lucrative targets.

In addition, the percentage of financial victimization warning signs has dropped by seven percent, which seems to be due to more older Americans relying on help to make financial decisions.

Another bright spot: The survey found that 21 percent of adult children said their parents’ doctors and other healthcare providers have brought up concerns regarding how they were handling money, up from just five percent a few years ago.

Fighting elder abuse

Recognizing how big of a problem financial elder fraud is, the government has created numerous initiatives to help. An assortment of organizations – including CFPB, FINRA (Financial Industry Regulatory Authority), NASAA (North American Securities Administrators Association), and the U.S. Securities and Exchange Commission – have all put programs and regulations in place to curb incidences of elder financial abuse.

The bad news

While things seem to be getting better, there are still signs that this epidemic won’t be cured anytime soon. In the IPT survey, 21 percent of adult children said they believed their parents would be too embarrassed to tell them that they were being scammed. Plus, nearly half thought they wouldn’t be able to figure out on their own that their parents were victims, which is a dramatic increase from the last survey. This is especially true when elder financial fraud involves a trusted financial advisor or broker, who may commit acts like churning – excessively trading a client’s account simply to generate commissions – that are not easily spotted by individuals who are not financial professionals.

Even with these incremental improvements, financial elder fraud continues to plague Americans who have worked hard to earn their money. If you feel as though you are a victim of elder financial fraud by a broker or investment advisor – or perhaps a parent or older relative of a victim – it is important to take action as quickly as possible. Money may be able to be recovered through securities arbitration or other legal means.

For more information, contact the elder financial fraud attorneys at the Silver Law Group. We may be able to help you recover lost funds, and because we work on contingency, you won’t owe us anything unless you get money back. You can quickly get in touch with us by filling out our online form.

Older Americans Face Exploitation and Financial Abuse in Record Numbers

A report from the Florida Bar Journal cites studies indicating elder financial abuse is a growing trend

The number of elderly Americans is growing like never before. Census projections indicate that Americans 65+ will make up more than one-fifth of the U.S. population within 30 years, but despite the increasing numbers of older Americans, as a group, their quality of life has not necessarily kept pace. Improvements in healthcare are keeping people alive for longer, but they can’t always prevent cognitive disorders like dementia, which currently affects 5 million sufferers in the U.S. American family values have also changed – and with the fall of the multigenerational household, many children of older Americans no longer feel as obligated to directly care for them.

That leaves millions of Americans at home and often alone. And for many financial fraudsters, 80+ individuals are prime targets. Elderly individuals, some of whom suffer from dementia, can sometimes be easily convinced to sign checks, turn over sensitive account information, and reveal personal details about savings, investments, and credit cards. With older Americans at risk, how can we protect them?

The extent and nature of elder financial abuse in the United States

According to a study conducted by the insurance company MetLife, elderly Americans lose nearly $3 billion a year to fraud and financial abuse. Women, individuals between 80 and 89 years old, and elderly people who live alone are all at higher risk for financial abuse. More than half of elder fraud cases recorded in the study involved a stranger, and included telemarketing scams, home repair scams, robberies, and burglaries. More than one-third of fraud cases involved friends, neighbors, family, or at-home caregivers, while the remaining 12% of financial abuse cases involved professionals such as bankers, insurance advisors, attorneys, and nursing home administrators.

Scams perpetrated by financial professionals can often be devastating – and it’s important to know the signs

Despite the harmful nature of scams perpetrated by strangers, neighbors, family members, and medical professionals, scams perpetrated by financial professionals can be the uniquely devastating to vulnerable seniors. Unlike other financial scams, which may only lead to a few hundred or a few thousand dollars stolen, financial professionals often have control over hundreds of thousands or even millions of dollars in senior retirement portfolios.

While the exact type and nature of elder financial services fraud is slightly different in every situation, there are many criminal scams that are repeated over and over again, each time casting a new net for vulnerable seniors in a variety of settings. In order to protect yourself or a loved one who may be vulnerable to fraud, it’s important to understand the most common types of schemes that unethical individuals employ when targeting older individuals.

Common types of financial services fraud perpetrated by financial professionals include:

  • Churning
  • Power of attorney fraud
  • Unauthorized trading

Other common, but slightly-less-prevalent types of elder financial exploitation involve:

  • Fraudulent or misleading annuity sales
  • Penny stocks and junk bond fraud schemes

Churning scams involve brokers and advisors making unnecessary trades to profit off commission fees

Most investment brokers generate a part of their profits through commissions, usually a percentage-based or flat fee that is levied on a customer each time the broker buys or sells an investment for them. In many cases, this means that the more trades a broker executes for a client, the more money they’ll make. This incentive can lead a broker to intentionally over-trade a client’s account in a way that is not suitable for the client’s investment objectives.

This unethical practice, often referred to as churning, is a risk for brokerage clients of all ages. However, it is an especially big problem for older investors, who may not regularly check their account statements to verify and inspect the condition of their investment holdings. In some cases, older individuals may want to open a fee-based account, which usually charges a client 1-2% of the value of the account and includes commissions as part of that fee. This way, a broker is not incentivized (or is much less incentivized) to make trading decisions that will negatively affect their client.

Unethical investment professionals may attempt to convince elderly investors to sign away their power of attorney

Granting an individual power of attorney (POA) allows them to make important financial decisions on another person’s behalf. While there are situations where a highly-trusted advisor could be granted a limited power of attorney for a specific period of time in specific situations, some brokers or advisors will attempt to pressure elderly individuals into signing their power of attorney away. This gives them control over a client’s account and can lead to serious financial abuse.

Before you or an older family member sign any POA forms, it’s a good idea to consult a trusted lawyer or other reputable legal and financial professionals to get advice about what you’re considering signing away.

Unauthorized trading can often result in serious investment losses for elderly individuals

Unauthorized trading occurs when a broker or financial advisor makes trades without the permission or against the wishes of a client. Unauthorized trading, much like churning, is a concern that affects all investors, regardless of age. However, like churning, unauthorized trading may affect elderly individuals more than the average investor, considering that many older investors do not regularly monitor their brokerage and investment accounts.

The more up-close signs of elder financial abuse often include:

  • Funds disappearing from bank or investment accounts without explanation, valuable items disappearing from a person’s home, or bills not getting paid on time.
  • Elderly individuals acting more secretive and getting a variety of unexplained credit or debit card charges.
  • A family member or professional advisor who is responsible for or heavily involved in the elderly person’s finances won’t reveal essential information about their assets and accounts.

Better legal protection is needed for elderly individuals facing issues with cognitive decline

Florida law aims to protect the elderly from abuse and exploitation, but the law does not always safeguard the finances of elderly individuals with diminished decision-making capacity. Even in some cases in which the financial abuse seems clear, some Florida courts have ruled to maintain the original decision of the elderly individual. Fortunately, there are a range of mechanisms, including both litigation and securities arbitration, which takes into account specific financial industry regulations, that can serve to recover funds or otherwise achieve justice.

The difference between diminished capacity and capacity can be unclear

Unless stated otherwise, every individual has the capacity to enter into transactions of any kind. In the cases where a person is legally declared by a court to have less than full capacity, the court must determine which rights they are able to exercise and which ones they are not. If there are no good alternatives, an elderly individual will then be appointed a guardian who is often a family member. Nevertheless, the law is designed to interfere as little as possible with an individual’s right to make decisions for themselves.

If you suspect an elderly friend or loved one is a victim of financial abuse involving a broker or advisor, contact an experienced attorney

As the population of elderly individuals grows, unscrupulous financial advisors and brokers see millions of potential new victims. To prevent elder financial abuse from getting out of hand, investigate suspicious behavior and activity as soon as possible, and if you think you see evidence of elder financial fraud, contact an experienced elder financial fraud attorney.

The attorneys at Silver Law Group are leaders in the field of securities arbitration and elder financial fraud. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.